a single source, nothing corroborates it

Price the business against the multiple it sells at

These businesses trade at a multiple of annual recurring revenue, which means even a few hundred a month is a saleable asset and the multiple itself climbs as revenue does. Work backwards from the exit you want to the monthly revenue that reaches it, rather than growing first and asking later. Selling under external pressure destroys the negotiating position and the standard multiple stops applying.

The method

1. 01

   Even a few hundred a month is a saleable asset, because these businesses trade at a multiple of annual recurring revenue.

2. 02

   Multiples climb as revenue does, so set the revenue target from the exit you want rather than the other way round.

3. 03

   Selling under external pressure destroys your negotiating position, and the standard multiple stops applying.

4. 04

   Start from monthly revenue times twelve times five as the asking price, then adjust it for everything else.

What it returned

• $300

  $300 a month is $3.6k a year, which at 2x to 3.5x values the business up to $12,600.

• $10K

  Around $10K MRR a 5x annual multiple becomes plausible, which puts a $1m sale at roughly $16.6K MRR.

Sources

• How to Sell a StartupChris Frantz · chrisfrantz.com · 2021-06-13
• 3 lessons learned selling 3 SaaS productsLuca Restagno · solopreneurtofreedom.com · 3. Exit value · 2023-12-17